AUSTRALIAN WHEAT BULLETIN - 16th August 2005Friday, 2 Sep, 2005
The global wheat balance sheet is slowly tightening. In last week's USDA Crop Production Report, estimates for new season production and ending stocks were both revised down, as the shortfall between consumption and production increased.
Globally the shortfall has been increased by 1.89 million tonnes since the July estimate, to a deficit of 6.91 million tonnes. Importantly a lot of this increased shortfall will result in ending stocks in the US being reduced. The US will still grow their stocks this year, but only by 17% rather than the 25 - 30% projected earlier.
Another important factor is that stocks outside of China will fall this year. With stocks in the US actually still rising, this means that stocks outside of both the US and China will fall by 5.8 million tonnes. This is why demand for US wheat has increased, as estimated production figures for other non Chinese countries pulls back.
At this stage the figures are all too little, too late. Prices for this season will remain under pressure unless production in Australia pulls back sharply going into the end of our season. That is possible. The season outside of Western Australia is late, growing season rainfall is below average in the south and east, and the latest forecast issued today (August 16th) is calling for below average spring rainfall across most of southern and eastern Australia.
Late in the year a pull back in Australian production may push enough demand back to the US to allow global wheat prices to improve leading into the New Zealand wheat harvest in early 2006.
Malcolm Bartholomaeus
Managing Director
Callum Downs Commodity News
Clare, South Australia
Ph 61 8 88422781
Email callum@capri.net.au
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